Thanks this post was helpful. The example for the euploadify extension does not correctly load the session. Based on this thread I did the following in my index.php (entry script.)
if (isset($_REQUEST['PHPSESSID']) && strpos($_SERVER['REQUEST_URI'], 'productImage')) {
//handle special auth case for uploadify widget using Flash
$_COOKIE['PHPSESSID'] = $_REQUEST['PHPSESSID'];
}
I added one extra test for a little extra security by only loading sessions from request data for certain requests.